Commentaries on current events, political economy, and the Communist movement from a Marxist-Leninist perspective.
Zigedy highly recommends the Marxist-Leninist website, MLToday.com, where many of his longer articles appear.

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Thursday, April 27, 2017

Exactly
ten years ago this past April 7, I posted an article on
Marxism-Leninism Today
entitled Tabloid Political Economy:
The Coming Depression (for those who
missed it, it is reproduced below). It was my first and only attempt
at economic prognostication, always a challenging and risky venture.
The “Tabloid” in the article’s title was a tongue-in-cheek
reference to the headline in the April, 2007 issue of a now defunct
supermarket tabloid, Weekly World
News. Featured between Virgin
Mary Slaps Boy and Jews
Invented Pizzoh was the shrill
admonition: Surviving the Next Great
Depression! It’s Coming This Summer!

It
didn’t come in the summer of 2007.

In
fact, the Dow Jones Industrial Average continued to climb seemingly
with no limit, reaching a new peak in the fall of 2007. The pundits
continued to extol the virtues of unbridled capitalism.

While
the folks at WWN built
their case on scant evidence (“Skyrocketing gas prices, escalating
war, crashing housing prices, calamitous weather and freefalling
stock prices…”), there were many other good reasons to take their
prediction seriously, reasons which I offered in my article.
Unfortunately, the print edition did not survive to see the collapse
that rocked the foundations of the global capitalist economy the
following year. Nonetheless, the zany supermarket tabloid proved to
be far more prescient than the Nobel laureates, academics, and
popular pundits who postured as learned economists yet never saw the
collapse coming.

Ten Years On

The
global economy never fully recovered from the crash of 2008. Instead,
it has stumbled along from one setback to another, with economic
growth only marginally topping population growth. When both the
enormous loss of wealth from the crash and the obscenely unequal
distribution of the wealth recovered since the crash are configured,
it is fair to say that the vast majority of the world’s population
have seen little or no recovery. In fact, the casualties from the
crash continue to pile up.

The
US economy is neither healthy nor without serious symptoms. Despite
the market euphoria that surprisingly accompanied the Trump election,
the Atlanta Federal Reserve has lowered its growth expectations for
the first quarter to .5% from an earlier forecast of 3%. Other
projections have similarly dropped.

For
three months in a row, since January, durable goods orders (excluding
volatile transportation orders) have dropped. Industrial production fell .1% in January and was unchanged in February. Factory output
dropped .4% in March from February and was only up .8% from a year
earlier.

Bank
loan growth has slowed.

Retail
sales slowed by .3% in February and .2% in March. Inflation, as a
measure of consumer demand, dropped .3% in March. Retail stores are
closing in unprecedented numbers and retail employment growth has
slowed.

Sales
of new cars-- the principal driver of consumption growth since the
crash-- has fallen for three straight months. Auto dealers are now
offering buyer incentives that are greater than the labor costs of
production (labor costs are less than $2500 per car, on average).
Incentives account for 10.5% of average sticker price ($31, 435). Yet
the average car sits for over 70 days on the lot.

Used
car prices were down 8% in February, another sign of declining
demand. And auto loan defaults are on the rise.

The
US trade gap-- the difference between imports and exports-- reached a
5-year high in February.

In
stark human terms, the US economy is failing working people. Between
January 2016 and January 2017, average hourly earnings slipped .1%
and the hours of the average workweek dropped .3%. This calculates to
a .4% loss in real average earnings for those twelve months.

With
reduced earnings, more and more workers are drawing on their
retirement savings: 20% of 401(k)s have been reduced through
self-loans.

Not
surprisingly, household debt in 2016 grew the most in a decade.
Unlike in the lead-up to the crash, mortgage debt is growing
modestly, still below the explosive growth rate of that time.
Instead, the growth in debt is in credit cards, auto loans, and
student loans. Auto loan debt has reached $1.2 trillion, while
student debt has risen to $1.3 trillion.

Student
debt is particularly crippling. There are 42 million outstanding
loans. The average student loan debt jumped from $26,300 in 2013 to
$30,650 in 2016. Defaults went from 3.6 million in 2015 to 4.2
million in 2016.

And
senior citizens are saddled with growing debt as well. In 1998, 30%
of people 65 and older were in debt. In 2012, the percentage of
seniors in debt reached 43.3. Growing debt comes in the wake of the
collapse of net worth since 2005, when it topped $300,000 among those
55 to 64. By 2013, average net worth within that group dropped to
$168,900 (even below the net worth of $175,300 reached in 1989).

Talking
heads and media “experts” hail the job market. But they seldom
delve deeply into its performance. Put simply, capitalists are hiring
additional workers, rather than purchasing labor-saving equipment,
because labor is cheap and flexible. The failure of organized labor
to defend or advance labor’s relative position has served as a
disincentive for capitalist investment in new technologies and
equipment. They see no need to do so, when labor power can be used on
demand, with no restrictions, and at low costs.

That
trend is clearly reflected in the most recent period’s historically
poor growth in productivity, among the lowest periods of productivity
growth since the Second World War. Contrary to the widespread hawking
of the idea that most workers are in danger of being replaced by
robots, corporations are showing little interest in the introduction
of new or old technologies. They are spending very little on
equipment. While the technology may be there, capitalists have shown
little need for it, given low labor costs.

As
Shawn Sprague shows in a recent BLSpaper,
since 2009 the growth of aggregate hours-worked has grown more
quickly than the growth of non-farm business output. This fact
demonstrates that US capitalists feel little pressure to “save”
labor while restoring profits during the so-called “recovery.”
Rather than having existing workers work more hours, they are hiring
more workers at low wages and contingently. Profits rebounded nicely
because the working class had been slammed by the downturn, rendering
the employment costs so low that there was no need to invest in
labor-saving equipment.

This
harsh truth has been ignored by economists and labor leaders alike
because it shows the complete bankruptcy of class collaboration as an
approach to social justice for workers.

US
capitalists have enjoyed a decade of low labor costs, no pressure to
invest retained earnings, and high profits (corporate after-tax
profits dipped in 2015, but came back smartly in 2016). By securing
labor power at low costs, they have foregone the purchase of
labor-saving instruments and achieved modest growth by expanding
employment. Today, capital is profoundly afraid that, with reduced
unemployment, competition for labor power will drive up the costs of
labor and erode profits. The Trump tax change package, favorable to
corporations and the repatriation of profits, is one ruling class
response to this anticipated problem.

Despite
the return of an overheated housing market with escalating prices
(lagging new construction is fueling demand), no systemic
accumulation crisis comparable to that of 2007-2008 appears on the
immediate horizon. Instead, the post-collapse era of stagnation and
deteriorating living standards continues for the working class. As
the shrinking income and mounting debt of working people erodes
aggregate consumption, the possibility of a business cycle
contraction grows more and more likely. The long, tepid expansion
transferred nearly all its gains to the wealthy few, leaving little
but debt or asset cannibalization for the majority. With declining
retail sales, especially auto sales, and the growing weight of
personal debt, the likelihood of further consumption growth is in
doubt.

A
business cycle contraction will only further weaken the position of
working people, setting them up for a further dose of sacrifice and
pain.

Always
alert to emerging trends, I spotted the latest issue of the Weekly
World News
at the checkout counter of my supermarket. The headline announced the
coming depression scheduled for this summer. Sandwiched between a
sighting of Batboy in the New York Subway and alien abductions was
the dire warning to prepare for a severe decline in the world
capitalist economy. Now, Left sects sport this prediction more
frequently than Elvis sightings or the announcement of Armageddon.
Nonetheless, I paused for a moment. Who, I asked myself, has their
fingers on the pulse of the economy more than the tabloids? Should we
trust the tabloids less than the battery of economists periodically
assembled by The
Wall Street Journal?
Would Ben Bernanke of the Federal Reserve tell us a depression was
coming if he knew? Would Bush? Or Hillary?

The
pieces of the economic puzzle began to come together for me. The
housing bubble - the steady march of rising residential values that
fueled enormous borrowing against assets - had finally began
deflating, with no signs of let-up. The US middle class - saddled
with record consumer debt and living from pay check to pay check –
mortgaged their homes to maintain their “middle” status. Deathly
afraid of falling below the media fueled standards of respectable
success, they drew from their most precious assets to stay in the
game.

At
the same time, predators seized the moment afforded by the heralded
market-place. Sub-prime lenders fed on the false prosperity by
drawing the poor and the status-hungry to absurd loans, front loaded
with instant gratification and back loaded with long-term pain.
Stoking the housing bubble, budding entrepreneurs borrowed
irresponsibly to purchase residential properties fully expecting
values to rise and affording them the opportunity to “flip” the
properties for an easy profit.

Like
all hustles, the lure of easy money drew the most vulnerable, the
most gullible, and the greediest into the game just as the bubble was
bursting. Millions are facing stifling debt, foreclosures, and
destruction of much of the value of their most valuable asset, their
home. Economists estimate that 1,300,000 homes will foreclose this
year, throwing additional housing stock into a market already
suffering low demand. With an expected 50% decline in sub-prime and
other easy mortgage terms in 2007, fewer people will have even a
remote chance to buy from the swelling housing glut.

Of
course those wiser heads who diligently worked two jobs, overtime,
and ignored the temptation of easy credit also lost big time.
The value of all housing is expected to drop 5% this year - the
steepest drop since the Great Depression. In other words, the most
precious asset of the working class will decline to 95% of last
year’s value through the sheer irrationality of the market economy.

Nor
is this a short term setback. A late March report by Emmanuel Saez
and Thomas Piketty shows a level of inequality in 2005 unmatched
since before the Great Depression (see The
New York Times
3-29-07). Based upon 2005 IRS data, the authors concluded that the
top 10% of the US population now commands 48.5% of all annual income,
leaving 51.5% for the other 90%. Similar inequalities exist within
the top 10%: The top 1% receives 21.8% of all income (nearly half of
the income share of the top 10%). And so it goes. The top 1/10 of 1%
(roughly 30,000 individuals) shares nearly as much income as the
bottom 150,000,000.

In
short, the US has become a society rivaling and exceeding
pre-industrial England in class division and inequality. One of the
earliest reasonably accurate surveys of class and income division –
the famous 1688 estimates of English incomes by Gregory King – show
the top 5% of English families garnering 28% of incomes (the top 1%
of US individuals receive 21.8% of all incomes!). So the barons,
lords, merchants, and traders of Olde England were less privileged
than our own capitalist class. And we fought a revolution to escape
the tyranny of the English ruling class only to replace it with our
own home – grown privileged class!

No
doubt the insightful team of political economists at the Weekly
World News are
aware that the post-2000 economic “recovery” was fueled by
consumer spending, a source of energy that would appear to be nearly
tapped out with personal debt at an all time high and personal wealth
- the home - declining in value.

While
bourgeois economist whistle past the graveyard, the coveted market –
the magical mechanism that guides capitalist economic growth—seems
to reflect deep – seated fears and insecurities. Despite being
awash in capital, financial power searches for investment
opportunities to no avail. Economic theorists have been puzzled by
the low returns available, even for high-risk or long-term
investment. Under normal circumstances, risk and patience earn a
premium in investment, but not today. Instead, the enormous pool of
wealth concentrated in fewer hands can only lure borrowers at modest
rates. There is simply too much accumulated wealth pursuing too few
investment opportunities.

Other
alarm bells sound: Productivity growth, a centerpiece of US economic
health, is now slipping below historic averages. Much of the economic
success of the Clinton era is attributed to the restoration and
maintenance of high productivity. During the last half - decade of
his term productivity hovered at the same level as the post - World
War II period. Most economists attribute this largely to the
integration of new technologies into US industry. After the 2000
decline, productivity rose again thanks to the Bush administration's
support for draconian management practices that squeezed every extra
ounce of labor from the retreating working class. Outsourcing,
downsizing and bankruptcy maneuvers forced fewer workers to work
harder for less. Thus, the first hike in productivity came from
technological change and the second from sweated labor.

But
now productivity is dropping. Apparently, the technology impact has
played out and the squeeze on labor is bearing limited returns:
productivity growth dropped to a low of 1.4% in the last quarter of
2006.

The
enormous national debt adds to the list of ominous signs of decline.
The obscene costs of the Iraqi occupation, the hysterical “war on
terror”, and tax relief for the rich have left the US with
unprecedented debt. Foreign trading partners have largely financed
this debt by using their enormous surplus of dollars to buy US
treasury notes. Yet there are increasing signs that as the dollar
declines in value, they may be looking at other options.

The
recent US tariff against Chinese high – gloss paper signals
increasing tension between the US and its leading trading partners.
There is a strong feeling internationally that the US is anxious to
pass its economic burdens onto others. In the past, US economic might
was sufficient to bully other countries to accept this sacrifice. But
today, there is a growing resistance to US unilateralism—another
sign of declining economic power.

Since
both political parties maintain a general consensus on economic
doctrine, it is unlikely that any new solutions will emerge to
confront these serious cracks in the US economy. This ideological
uniformity limits the policy decisions of the two parties to faith in
the neo-liberal market and free, unfettered trade. With no answer to
growing inequality, wasteful imperial aggression, and market
anarchism, the prospects for avoiding crisis appear bleak. Let’s
see if the Weekly
World News
gets it right.

Friday, April 14, 2017

After agreeing that the US attack
upon a Syrian air force base constituted a violation of international law, a
violation of Syrian sovereignty, an Ivy League law professor told NPR that he
believes that the premeditated strike was justified nonetheless. The professor
likened it to running a stop sign or a stop light in an emergency.

This is the level of tortured
hypocrisy to which US intellectual elites have sunk.

Across the corporate media spectrum
similar irresponsible “justifications” dominate the conversation, including
from the center left. Some, like the once discredited, but still indulged,
Brian Williams of MSNBC, border on the crazed, invoking songster Leonard Cohen
to marvel at the “beautiful” cruise missile launches.

Within the two-party political
circle, a similar consensus welcomes or approves the missile attack. The
corporate Republican leadership, including Senate leader McConnell and House
leader Ryan, join the corporate Democratic leaders, Senator Schumer and Senator
Feinstein, in their approval. Senate hawks McCain, Graham, and Rubio, who had
earlier criticisms of Trump, hail the attack. McCain saw Trump’s leadership of
the aggression as “presidential.”

This sounds eerily like the drumbeat
accompanying previous US aggressions against countries that refuse to honor the
imperial playbook. An equally ready consensus emerged with recent US military
violations of sovereignty in the former Yugoslavia, in Iraq, and in Libya, not
to mention numerous uninvited covert actions throughout the world.

The Sales
Effort

Sadly, the US establishment has
succeeded in selling aggression as “humanitarian intervention,” the modern
equivalent of nineteenth-century “civilizing the savages.” As this selling job
has gotten more sophisticated and the perpetrators have grown more successful,
the need for allies has declined. The US used the UN as a cover after the
demise of the Soviet Union; it contrived a “coalition of the willing” to mask
aggression in the Middle East; and it hid behind the NATO shield in recent
years. Today, it acts unilaterally, brazenly.

Making full use of the compliant
corporate media, naive human rights organizations, and corporate and government-funded
NGOs, imperialism relies upon opportune “incidents” that cry out for sympathy
and prompt a call for action.

Of course, provocation is not really
a new ploy. It has been part of the imperialist tool box since the dawn of
empire. The US introduction to contrived provocation coincided with its entry
into imperialist competition: the sinking of the battleship Maine. With the
help of Hearst and Pulitzer, icons of US journalism, the incident “justified”
the US military embarking on a colonial mission against Spain.

More recently, the phony Tonkin Bay
incident notoriously served to gather public opinion behind a massive
escalation of the war against Vietnam.

And of course, there was the “weapons
of mass destruction” hoax that, thanks to the media frenzy generated by Judith
Miller, the New York Times, and the Washington Post, led to war and the
loss of hundreds of thousands of lives.

In the post-Soviet era, “humanitarian
intervention” replaced imperialism’s Cold War strategy of fighting national
liberation under the banner of “anti-Communism.” Today, US imperialism uses a
multi-faceted approach: subversion, covert support for discontented “democrats”
and surrogate “freedom fighters,” and naked intervention.

The corporate media is only too happy
to fan the flames, shamelessly turning national leaders into “brutal dictators”
regardless of the frequency of elections or their apparent legitimacy. That
same media instantly converts religious zealots into righteous democrats and
neo-Nazis into human rights activists. Any country that strengthens its
military against threats of imperialist intervention becomes a threat to its
neighbors or dangerous aggressors. And imperialist military maneuvers or buildups
are merely responses to belligerency. All that is needed beyond the propaganda
campaign is a provocation to spark a policy shift or military adventure.

Strike the
Match!

Two recent events--the death of Kim
Jong-nam and the alleged gas attack on a Syrian village--have disrupted
processes that had promised to lower international tensions, derail the
prospects of further conflict, and disrupt imperialist
plans. One process held out hope that US-DPRK relations would improve, opening
the door to reconciliation on the Korean peninsula. The other offered an early
end to the war devastating Syria and its people.

Both processes were interrupted in a
manner that should generate doubt and suspicion on the part of any reasonable
person. Both processes were thwarted by “incidents” or provocations that were
instantly inflated and characterized by a corporate media that follow a line
uncannily identical with that crafted by imperialism.

In February, Kim Jong-nam died under
suspicious circumstances in an airport in Malaysia. Kim traveled on a DPRK
passport and was purportedly the half-brother of Kim Jong-il, the leader of
DPRK. Immediately, a narrative circulated in the Western press that attributed
the death to agents of the DPRK. Because of the haste in reporting the conspiracy,
parts of the narrative had to be replaced, patched, or modified as questions
arose. No independent investigation was permitted; nor was the DPRK allowed
access or possession of the body of its national until much later. Questions
arose over why security agencies of the ROK were engaged at the onset of the
incident. And clear indications of KCIA invention loomed over the most glaring
discrepancies in the story.

But most telling were the
circumstances. The President of the ROK, Park Geun-hye, an anti-DPRK hardliner
and US puppet, was about to be removed from office because of corruption and
massive demonstrations for her impeachment in response to that corruption.
Waiting in the wings was the likely new leader, an opposition politician known
for his commitment to steps toward reconciliation with the DPRK. Few US
citizens knew of the large southern Korean reconciliation movement because of
the veritable news blackout of anything placing DPRK in a favorable light.

At the same time, a hysterical media
campaign was popularizing the “North Korean military threat” and the US was
rushing its sophisticated THAAD missile system to the ROK, a direct provocation
of the DPRK and the PRC. The US moved quickly to take advantage of Park’s
waning days and the impolitic of removing the missiles once they were there.
The Kim affair conveniently added to the argument that the DPRK could not be
trusted, part of a blatant effort to thwart any attempt at North/South
reconciliation.

More recently, the alleged gas attack
in Syria occurred in the midst of considerable hope that the war would be
coming to a close. Assad and his allies had turned the war against the US,
Salafist, and Turkish-sponsored opposition as well as their mercenaries. The
Trump administration made noises about accepting Assad’s continued governance
in Syria. Peace talks were continuing amidst renewed hopes and there was an air
of optimism about forthcoming talks between the Trump administration and the
Russians.

But since the first of the year, a
campaign had been waging against elements of the foreign policy of the Trump
administration. Charges of unsavory contacts with Russia took on a relentless
public life, spread by political foes and the media, and fueled by carefully
placed leaks and innuendo by the security services. Despite little evidence of
anything out of the ordinary or seriously compromising, the association of
Trump with Russian machinations quickly reached hysterical proportions. What
began as a diversion from the exposed chicanery and electoral failure of the
Democratic Party gathered momentum and transformed into a broad attack on
Trump’s deviations from the ruling class playbook. The Russia-baiting was
served up to discredit Trump’s renegade isolationist, America First policy.
Trump had drifted off the reservation with his hands-off foreign policy, his
live-and-let-live approach to Russia, Syria, and the DPRK.

To get him back on the reservation a
provocation was needed. It was found or contrived with the alleged Syrian
government gas attack on civilians.

The Soft Coup

Whatever really happened in the
village in Syria will likely never be known. Like the death of Kim in Malaysia,
any hope of an objective investigation has passed with the politically charged rush
to judgement on the part of Western leaders and their media shills. Truth was a
victim of opportunity. Both events, as depicted in the Western media, were
better seen as carefully crafted, politically useful theater than as part of
the fabric of reality.

The last glimmer of truth-based
journalism disappeared from the corporate media when the work of the US’s
greatest investigative journalist was exiled. Since 2015, when Seymour Hersh’s
article on Syria could find no US publisher inclined to publish it, US
mainstream international reporting has been universally politically motivated,
tainted by bias, and, frankly, ignorant. Hersh was celebrated when he exposed
the crimes of My Lai or Abu Ghraib, but he is no longer wanted when he dares to
question today’s foreign policy consensus. One finds more truth in celebrity
gossip reporting than in international reporting datelined from a comfortable
foreign city with a media-friendly US embassy available.

The upshot of a lapdog media is the
readiness of media puppies to do their master’s bidding.

Since Trump’s election, the media has
once again served loyally as the instrument of the US ruling class. It should
be no secret that all of the candidates but Trump were carefully vetted by that
same ruling class; while they all played different hands, they recognized the
same rules. Trump did not always play by those rules, he didn’t play nice, and
he had some outlier ideas. And the media has set out to punish him for his
audacity.

With his victory, alarms went off.
Plans were hatched to force Trump back in line. The security services and the
corporate media collaborated to realize those plans. With ruling class fear of
a measured position on Russia, a tale of intrigue and secret plotting was
created out of whole cloth. The old Russian bear-baiting strategy was brought
out of retirement and the game was on!

The war rages in the Trump
administration between those who cling to the isolationist position promised in
Trump’s campaign and those who urge him to return to the reservation and
embrace the ruling class line of belligerence towards Russia and the stoking of
aggression in the Middle East and Asia. Clearly, the purge of Flynn and the
removal of Bannon from the National Security Council paved the way for the
attack on Syria and the saber-rattling in and near the Korean peninsula. For
the moment, the corporate, establishment faction has the upper hand. Son-in-law
Jared Kushner, trusted military advisor H. R. McMaster, and reliable corporate
boss, Gary Cohn, former president and COO of Goldman Sachs, appear to be
steering Trump back to the ruling class mainstream and away from a sane foreign
policy.

The retreat from sanity owes much to
US liberal elites who shamefully stoked and continue to stoke the anti-Russia
hysteria that presses Trump to attack Syria. As the PRC news service, Xinhua,
noted, the attack on Syria was meant to send the message that Trump’s
administration was not “pro-Russia”.

How the battle will conclude is
unsure. Rumors abound that Trump will exile Bannon (and Priebus) and put
Goldman Sach’s Cohn in charge at the White House. That would constitute a solid
victory for the ruling class-- ironically, for the policies of Hillary Clinton.
Given that businessman Trump has no principles-- only ambition-- that is not an
unlikely outcome.

Through the turmoil of the last few
months, a soft coup has been unleashed, a coup meant to bring Trump back in
line with the ruling class foreign policy consensus, an imperialist game plan. In
the waning days of his administration, Barack Obama acknowledged this game
plan. He noted the intense pressures from the ”humanitarian interventionists”
and their dominance among the foreign policy establishment. They don’t wear the
badges “liberal” or “conservative.” Nor do they owe allegiance to “Republican”
or “Democrat.” Rather they represent a ruling class consensus.

While some
leeway in execution is permitted, the goals are non-negotiable. Trump
threatened to modify those goals. He is being schooled in the rules.